Senate and House proposal would restore lost value of the minimum wage and boost pay for 30 million low-wage workers

Washington, DC – Companion bills introduced today in the U.S. Senate and House of Representatives, titled the Fair Minimum Wage Act of 2013, would raise the federal minimum wage to $10.10 per hour by 2015, and adjust it each year after that to keep up with the rising cost of living. The bills’ chief sponsors are Senator Tom Harkin (D-IA), chair of theHealth, Education, Labor and Pensions Committee in the Senate, and Representative George Miller (D-CA), ranking member of the House Committee on Education and the Workforce. [See NELP fact sheet for key background and bill information].

Over 100 members of the House of Representatives, along with more than 20 Senators, have joined as co-sponsors of the Fair Minimum Wage Act of 2013. The National Employment Law Project applauded the proposed legislation, which will help restore much of the purchasing power that the minimum wage has lost over the past four decades, while also boosting spending at a time when the economy is suffering from weak consumer demand.

“Thanks to decades of Congressional abuse and neglect, the real value of the federal minimum wage has deteriorated as thecost of food, utilities, health care, housing and education has continued to rise,” said Christine Owens, executive director of the National Employment Law Project. “This bill would help recover much of that lost value, making a critical difference in the lives of working families and their children who depend on low-wage jobs to make ends meet.”

The federal minimum wage has lagged behind the rising cost of living for the past four decades. Had it kept pace with inflation since 1968, the federal minimum wage would be $10.59 today. Instead, Congress has voted to raise the minimum wage just three times in the past 30 years, allowing its purchasing power to decline by over 30 percent.

The Fair Minimum Wage Act of 2013 would raise the federal minimum wage from the current rate of $7.25 to $10.10 per hour by 2015, and it would provide for annual increases to the rate in future years to keep pace with the rising cost of living, a key reform known as “indexing” that ten states have already successfully implemented. The Harkin-Miller bills would also raise the minimum wage for tipped workers from its current low rate of $2.13 per hour, where it has been frozen since 1991, to 70 percent of the full minimum wage.

Raising the minimum wage to $10.10 per hour would boost pay for more than 30 million low-wage workers. According to analysis by the nonpartisan Economic Policy Institute, 88 percent of these workers are adults over the age of 20; 85 percent work more than 20 hours per week; and 43 percent have at least some college education. The minimum wage is also a staple of support for many families: more than 17 million children in the U.S. have a parent who would benefit from raising the minimum wage to $10.10.

With 70 percent of the economy driven by consumer demand, businesses cite lack of demand as a major reason they are not hiring. However, with overall wage growth stagnant and declining in low paid occupations, many consumers just don’t have the money to spend. The Economic Policy Institute estimates that raising the minimum wage to $10.10 would generate more than $32 billion in new economic activity, supporting the creation of 140,000 new full-time jobs as businesses expand to meet increased demand.

“The federal minimum wage lags far behind growth in every comparative measure over the past 30-plus years: Worker productivity has increased significantly, the average wage has edged up, and CEO compensation and corporate profits have skyrocketed. But minimum wage opponents have successfully eroded the value of this core labor standard that anchors the wage floor for millions of workers. With job growth concentrated in low wage occupations, we cannot build a sustainable recovery that extends economic opportunity to all of America’s working families until we fix the federal minimum wage,” said Owens.

Nineteen states have already set minimum wage rates higher than the current federal level of $7.25. A national poll conducted in 2012 found that nearly three in four likely voters (73 percent) support increasing theminimum wage to $10 per hour and indexing it to inflation. The same poll showed 50 percent of Republicans and 74 percent of Independents favoring anincrease in the minimum wage.

The Fair Minimum Wage Act is introduced at a time when the core of the U.S. economy is steadily shifting toward low-wage work. A recent report by the National Employment Law Project found that 58 percent of all jobs created in the post-recession recovery have been low-wage occupations. The growth of low-wage jobs in the U.S. has proceeded even as America’s workers have obtained better education and more skills: According to a report by the Center for Economic and Policy Research, while the share of Americans with college degrees nearly doubled over the past 30 years, the share of middle-class jobs in the U.S. actually shrunk by 2.8 percent.

The most rigorous economic research over the past 20 years shows that raising the minimum wage boosts worker pay without causing job losses – even in regions where the economy is weak or unemployment is high. A new study by the Center for Economic and Policy Research reviews the past two decades of research on the impact of minimum wage increases on employment and concludes that “the weight of the evidence points to little or no effect of minimum wage increases on job growth.”

The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org orwww.raisetheminimumwage.org.